Pakistan market not ready for 3G/4G auction – consultant - Mobile World Live

Pakistan market not ready for 3G/4G auction – consultant

15 DEC 2015

Pakistan’s push to hold a 3G/4G spectrum auction will likely be delayed by at least 12 months after the consultant hired by the telecoms regulator reportedly determined the market is not ready for another auction.

The consultant, InterConnect Communications, met with the country’s five mobile operators and other stakeholders and submitted its report to the Pakistan Telecommunication Authority’s (PTA) evaluation committee for review.

ProPakistani reported, using PTA sources, that the consultant found mobile operators are struggling with low margins and aren’t interested in investing in the spectrum within the next 12 months. The operators also complained about high taxes, low return on investments and weak economic growth.

The finance ministry has pushed PTA to hold the auctions twice this year, but both times the sale has been pushed back after all five operators said they would not participate. The reason behind the push is the government budgeted the auctions to generate PKR56 billion ($539 million) in fiscal 2014-15 and then raised its target for this fiscal year to PKR65 billion.  Minister of State for Telecom and IT, Anusha Rehman, told ProPakistani it aims to hold the 3G/4G spectrum auction by 30 June.

After the last auction in April 2014, in which blocks of 4G and 850MHz spectrum where unsold, the government assured operators it would address the industry’s challenges. The investment climate, however, has deteriorated this year. The federal government doubled the sales tax on various categories of imported mobile handsets in June to PKR300-1,000 ($3-$10), and the government in Punjab introduced a 19.5 per cent sales tax on internet usage in early June.

In addition, not only did mobile revenue drop 1.8 per cent in the fiscal year ending 30 June, but direct foreign investment plunged 72 per cent and the sector’s tax contributions fell almost 50 per cent from last year.

Only China Mobile-backed Zong has a 4G licence. But the attraction of a 4G auction is low, particularly after VimpelCom’s Mobilink merger with Warid Telecom was announced last month. Mobilink, the country’s largest operator with a 28 per cent market share, has said it won’t participate in the auction.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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